Greece faces ‘critical’ week

Greek Prime Minister George Papandreou has cancelled a US visit that was to begin today, saying he needed to remain in the country for a “critical" seven days in its effort to avert a bond default.

“The coming week is particularly critical for the implementation of the July 21 decisions in the euro area and the initiatives which the country must undertake," he said on Saturday.

Greece is rushing to meet demands from international and European Union partners that will allow the release of a sixth tranche of loans to prevent default.

The government on September 11 announced a levy on properties to help raise €2 billion ($2.66 billion) in a bid to show it is serious about plugging a swelling budget deficit, key to getting a second financing package agreed to by EU leaders on July 21.

EU and International Monetary Fund inspectors will today hold a conference call with Finance Minister Evangelos Venizelos to resume and accelerate their review, the Athens-based ministry said.

Mr Venizelos said that putting the July 21 accord in place was the priority for the country.

“Our problem is to ensure that we get the sixth payment and each future payment with the best possible terms as we can’t keep having a repeat of the same scenario," Mr Venizelos said in Wroclaw, Poland, after a meeting with European counterparts.

In later statements, he dismissed talk of the country declaring bankruptcy and said Mr Papandreou cancelled his visit to be prepared to make quick decisions.

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The US trip cancellation “isn’t due to the fact there is an economic risk or some extraordinary economic event but to the fact that now is the time to take the necessary political, legislative, organisational and administrative initiatives which will definitively lead the country out of this recycled pressure", Mr Venizelos said.

An editorial in Kathimerini newspaper on Saturday headed “Your country needs you" called the US trip “inexplicable" and said a week-long absence wasn’t compatible “with the gravity of the current situation, as Greece stares into the abyss".

Mr Papandreou last week promised a “decisive battle" for budget cuts to persuade European governments and the IMF to release the €8 billion loan instalment.

Greece is now looking to the next meeting of euro-area finance ministers, on October 3, for a decision on the release of the instalment. The loan would be disbursed by mid-October, enabling the government to pay its bills through the end of the year.

Greece had the cash reserves to cover its needs for October, Deputy Finance Minister Filippos Sachinidis said on September 12.

EU partners have said the sixth loan won’t be paid if they aren’t convinced Greece is doing enough to curb a budget gap that soared to 15.4 per cent in 2009.